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Checklist When Considering A Retirement Village
Choosing A Retirement Village – What To Look For
Asset Rich Income Poor – What Can You Do?
Planning To Meet Elder Care Needs
What Is Your Level Of Capacity Today And What May It Be Tomorrow?
Checklist When Considering A Retirement Village
Bill Duncan and Tony Fortune have acted for many intending residents of retirement villages and have reviewed many occupation licences. This checklist identifies 8 key aspects (and possible options) that intending retirement village residents should consider carefully:
1. Weekly/Monthly Fee Guarantee
Does the village operator guarantee that it will never increase the base weekly/monthly fee for the entire time you occupy your townhouse or apartment at the village; regardless of any changes to the operating costs at the village?
Alternatively, if the fee does have the potential to increase is the increase limited to:
- the proportion by which National Super increases from time to time; or
- the increase in the Consumer Price Index since the last review?
2. Continuity of Care
Does the village offer nursing assistance, available 24 hours a day, seven days a week?
Are rest home and hospital facilities available onsite?
Is priority access provided to those care facilities for townhouse or apartment residents?
Residential units in villages that do not have full rest home and hospital care facilities available, in our experience, often take a number of months longer to “sell” than those where such care is available.
3. Village Contribution fees
Most retirement village licences provide for deferred management and maintenance fees (“Village Contribution”) to be deducted from the licence fee paid to the village. This usually occurs during the first three to five years of the licence term and will vary between 20% and 30% of the full licence fee paid for the licence.
What rate applies to the village you are considering? How quickly is it deducted?
In the event that you wish to transfer to another townhouse or apartment, is another Village Contribution incurred again or does the Village Contribution only get deducted once?
4. When does the Weekly/Monthly fee stop when you vacate your townhouse or apartment
At end of 6 months from the day you vacate?
Continues until the townhouse or apartment is “sold” by village to a new resident?
Continues until townhouse or apartment “sold” but reduces by half after 6 months?
5. Repayment of Licence fee on termination of Licence
It is standard practice for retirement villages to repay your licence fee/occupancy advance when the townhouse or apartment has been “on-sold” to a new resident. This may take 12 months or more.
Does the village offer a guarantee that if a new resident has not settled within six months of you vacating your unit, the village will either:
- pay you interest on your occupancy advance until it is “paid in full.”
- repay the licence fee/occupancy advance no later than 6 months after you vacate whether or not the townhouse or apartment has been “on-sold”?
6. No Capital Loss
Are you exposed to any capital loss when your townhouse or apartment is “on-sold” in addition to the deduction of the Village Contribution?
In other words, are you at risk that the amount you are repaid will be affected by a decline in the value of the townhouse or apartment?
7. 90 Day Money Back Guarantee
In addition to the statutory “cooling off” period of 15 working days from signing your occupancy agreement (before you have taken up residence) does the village provide you with the option at the end of 3 months from when you took occupation of the townhouse or apartment to request cancellation of the licence for your townhouse or apartment and have the licence fee/occupancy payment refunded to you in full?
At least one village operator provides this option which can be very beneficial if you find you do not like retirement village life once you have taken possession.
8. What happens if village substantially damaged or destroyed?
Does the village operator have access to other villages to enable it to offer you alternative accommodation (long term) in the event this happens?
Alternatively does the village agree to refund your entry payment in full without deduction of a Village Contribution if such an event happens?
Or will you receive back in these circumstances the lesser of:
- The entry payment less the Village Contribution less any moneys owing by you; or
- the full payment received by the Village from their insurer less the Village Contribution.
In this situation you may not have nearly sufficient funds repaid to you to enable you to enter into a new occupation licence with a different retirement village of similar quality.
We recommend you consider these points carefully (in addition to the matters discussed in our article Choosing a Retirement Village – What to Look For) when looking at the terms offered by the villages you are considering.
Contact us for assistance with Retirement Village matters.